An economic liberal and successful Chancellor
John Barnes looks at the life and career of Lord (Geoffrey) Howe, who died on Friday aged 88
One of the architects of the Thatcher revolution who became one of the primary factors in her downfall
Geoffrey Howe had good reason to believe himself the most successful Chancellor of the Exchequer since the Second World War. Quiet in manner and invariably courteous, he was often thought to be no more than an advocate for policies determined by Margaret Thatcher in No 10. Their relationship was, in fact, a good deal more complex. Howe’s commitment to economic liberalism was arguably more thought through, and at least as longstanding, as that of the Prime Minister.
In 1961, when editor of the Bow Group’s journal, Crossbow, he contributed a remarkable essay on the reform of the social services. “Conservatives surely must strive for a large reduction, in the long run, of the public social services”, he argued. “Over the whole field of social policy our firm aim should be a reduction in the role of the State.”
He rebuked Keith Joseph for envisaging a continued role for the State in supplying basic provision for everyone. He canvassed the idea of a negative income tax and advocated vouchers for education and health. A move must be made, he said, to the creation of a “self-help” State in which individuals were encouraged to provide for themselves and their families. The tax structure should be as “non-progressive as possible. And equality should never feature as an object of our social policy.”
In 15 trenchant pages he summed up most of what was to become the agenda of the radical right over the next half-century. He became part of the circle around the Institute of Economic Affairs; as a result he and Thatcher recognised each other as kindred spirits, although Howe thought her a little too dogmatic and prone to spoil a case by over-simplification.
Howe was surprised to be chosen as Thatcher’s shadow Chancellor, but the two forged a strong partnership. Although he was much derided by Labour’s Chancellor, Denis Healey, she had no hesitation in confirming him in the job when the Conservatives won the 1979 election.
Howe was sceptical about the Chancellor’s ability to influence things for the better and recognised that attempts to fine-tune the economy had been tested to destruction. He was sceptical of economic dogmas. While he professed to be a monetarist, that simply meant he sought to curb the excessive expansion of money and credit.
He sought to fetter his own discretion by setting out in the spring of 1980 a medium-term financial strategy (MTFS) devised by his then Financial Secretary to the Treasury, Nigel Lawson, and the Chief Economic Adviser, Terry Burns. Although surrounded with caveats, this looked to tie the Government to steadily bring down both the monetary target, M3, and the public sector borrowing requirement. Notable exponents of monetarism within the Government and outside it were doubtful about “graph-paper economics” (Thatcher’s trenchant description of what was intended) and they were proved right. But the discipline which adherence to the strategy imposed on the politicians was important in winning the battle against inflation. The Prime Minister, once converted, forgot her earlier doubts.
Howe was a brave Chancellor. He oversaw a switch from direct to indirect taxation and got rid of exchange controls. In 1980 and in 1981 he used fiscal measures to rein in the seemingly inexorable rise in public spending set in train by the Labour. If the MTFS was not delivered as intended, the 1981 budget brought the exchange rate down from where the second great oil shock had driven it and enabled a reduction of interest rates, ensuring that Britain emerged from recession.
But Howe did not confine himself to the Treasury. He was a powerful advocate for a tougher approach to trade union law and made an early push for privatisation. He deserves to be remembered as one of the principal architects of the Thatcher revolution.
Richard Edward Geoffrey Howe was born in Port Talbot in 1926, the son of a Welsh solicitor. His father’s family were nonconformist in religion and Liberal in politics, but his mother was a lifelong Conservative. Theywere comfortably off and took their summer holidays in France. Howe began his education at the local infants’ school, was speedily transferred to Bryntirion, a local prep school, and entered Abberley Hall in 1938 to be coached for Winchester. He duly won an exhibition.
Winchester saw him become an Anglican and a good debater. With his close friend, Michael Nightingale, he also developed a taste for archaeology, but was destined to make his career as a lawyer. In April 1945 he won a minor scholarship in classics at Trinity Hall, Cambridge. The war in Europe was nearing its end, but there remained Japan, and Howe enlisted. He attended a short course in mathematics and physics at the University College of the South West as a potential signals officer.
Howe completed his officer training at Catterick and served as a 2nd Lieutenant in East Africa, where he climbed Kilimanjaro and coped with the rising tide of Kenyan nationalism by giving political lectures in Swahili about how Africans should avoid communism and remain loyal to “Bwana Kingy George”.
Declining an offer to remain in the army, Howe read law at Trinity Hall, Cambridge. He was chairman of the university Conservative Association and on the committee of the Cambridge Union Society. He was called to the Bar in 1952 and made a QC in 1965. He became
chairman of the Bow Group, an influential Tory group of liberally-minded “modernisers” and edited its magazine, Crossbow. In 1958, he co-authored the report A Giant’s Strength published by the Inns of Court Conservative Associatio which argued that the unions had become too powerful and that their legal privileges ought to be curtailed.
Howe had contested the safe Labour seat of Aberavon in 1955 and 1959; he was elected for Bebington in 1964. With a slim majority, defeat was inevitable in Labour’s landslide victory in 1966, and Howe returned to the Bar.
Selected to fight Reigate, a safe Conservative seat, he returned to the Commons in the 1970 Election. His earlier spell in the House had impressed and Edward Heath had no hesitation in appointing him Solicitor General.
His principal role was to help Robert Carr with the Industrial Relations Bill but he played an even more crucial role in creating the legal relationship with the EEC embodied in the European Communities Bill. When Heath embarked on a major rethink of the Government’s approach to industry and wage bargaining in 1972, Howe was appointed Minister of State at the Department of Trade and Industry, with a seat in the Cabinet. He was not altogether comfortable with the retreat from free-market principles, but carried out his duties in relation to price control and consumer protection.
After successive Election defeats in 1974, Thatcher beat Heath in the first ballot of the leadership election in 1975. Howe contested the second ballot, which saw Thatcher elected, largely to put down a marker for the future. Appointed Shadow Chancellor, he masterminded the development of the policies embodied in a mid-term manifesto, The
Right Approach to the Economy, but did not always shine in parliamentary debate. Healey famously described being attacked by Howe as “like being savaged by a dead sheep”.
Howe became Chancellor of the Exchequer in 1979. His four-year term was characterised by radical policies to correct the public finances, reduce inflation and liberalise the economy. The shift from direct to indirect taxation, the development of an MTFS, the abolition of exchange controls and the creation of tax-free enterprise zones were key decisions. From the outset he was one of those pushing for privatisation, most notably of British Airways, and he was something of a hawk on union law reform. He was asked to take charge of preparing the Conservative manifesto for the General Election and was credited with delivering a document that gave few hostages to fortune.
After the 1983 Election Thatcher appointed Howe Foreign Secretary, a post he held for six years. He played an important part in reasserting the role of the five permanent members of the UN Security Council and developed a strong relationship with US Secretary of State, George Schultz, paralleling the bond between Reagan and Thatcher. His tenure was made difficult, however, by growing tensions with the Prime Minister on a number of issues, among them South Africa, but above all on Britain’s relations with the European Community.
In June 1989, Howe, and his successor as Chancellor, Nigel Lawson, threatened to resign rather than accept Thatcher’s veto on British participation in the first stage of European Monetary Union, the exchange rate mechanism; both believed joining would bring down inflation. John Major was unexpectedly appointed to replace Howe as Foreign Secretary; offered a choice of becoming Home Secretary or leadership of the House as Lord President of the Council, Howe preferred the latter, but only if he was also Deputy Prime Minister. Otherwise he would go.
The point was conceded, which made it seem a positive move. There was a good deal of sympathy for Howe over what was seen as a demotion, especially when Thatcher’s press secretary, Bernard Ingham, belittled the significance of the Deputy role. Whether the move was driven by fear of him as a possible successor or impatience over their clashes on Europe, it harmed Thatcher’s own position in the party but also weakened Howe politically. His wife, and Leon Brittan, both urged resignation, and were right to do so.
Howe’s last 15 months in government were less than happy. He made a series of coded calls on Thatcher to reposition her administration as a “listening government”. Neither he nor Lawson saw merit in the Poll Tax, which had made the government deeply unpopular. When Lawson resigned in 1989, Howe again considered resignation but decided to stay. Instead he reiterated the desirability of joining the ERM when conditions were ripe; but if he was throwing down a gauntlet, he did not follow through. Urged to resign and challenge for the leadership, he chose not to do so, and even joined with Heseltine and others to urge colleagues not to “force the party into a leadership election.” Instead a stalking horse candidate ran and lost in December 1989.
It was almost a year before he finally resigned from the Cabinet, on 1 November 1990. Thatcher had made it clear at the Rome European Council that, although Britain had finally joined the ERM in October (Howe was not even warned of the decision, much less consulted), it would never enter a single European currency. His letter of resignation attacked Thatcher’s conduct of the relationship with the EU.
He used his resignation speech on 13 November to explain why negotiators in Europe felt undermined: “It is rather like sending your opening batsmen to the crease, only for them to find, as the first balls are being bowled, that their bats have been broken before the game by the team captain”. He called on others to “consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long”. Although Howe claimed that his only intention was to constrain any shift in European policy by the Cabinet under the existing Prime Minister, his dramatic speech is rightly seen as triggering the events which led Michael Heseltine to challenge Thatcher for the leadership. Howe backed him and Thatcher resigned on 22 November, having just failed to secure an outright victory on the first ballot.
Victory went to John Major rather than Heseltine, and Howe remained on the back benches, retiring from the Commons at the 1992 General Election. He was made a life peer as Baron Howe of Aberavon, of Tandridge in the County of Surrey. He published his memoirs,
Conflict of Loyalty, in 1994. In the Lords, Howe continued to play an active part, speaking on a wide range of international and European issues, but his most notable contribution was undoubtedly his opposition to the Labour government’s plans for the reform of the House of Lords. He also took on a number of non-executive directorships in business and advisory posts in law and academia, including a position as international political adviser to the US law firm of Jones Day. He remained closely interested in the activities of the Conservative Group for Europe.
In 1953 Howe married Elspeth Shand, daughter of the author and architectural critic, Morton Shand, and aunt to the Duchess of Cornwall; they had three children, Cary and the twins, Amanda and Alec. Elspeth was a powerful influence on her husband, although her advice was not always taken, and a public figure in her own right. Her roles as deputy chairman of the Equal Opportunities Commission (1974-79) and later as Chairman of the Broadcasting Standards Commission, led to her joining Howe in the Lords in 2001 as Baroness Howe of Idlicote.
Before the 2010 election he was one of four former Tory Chancellors recruited by George Osborne to advise on how the party might deal with the economic crisis faced by the country and he continued to offer private advice to the Chancellor during the Coalition Government. He retired from the House of Lords in May 2015. Geoffrey Howe was a kind and warmhearted man. Profoundly reasonable, he was always open to argument, but brave and quite unshakeable when convinced that he was in the right. μ
‘Equality,’ he wrote, ‘should never be an object of our social policy’